How The Endless Quest For Love Is Sparking Massive Growth In Dating Apps

Abigail Dalton One in 10 Americans have used an online dating site or app, according to a 2013 report from Pew Research. And among singles looking for partners, that number is even higher, with 38% having used dating sites or apps.

What may have been associated with a certain stigma in years past is now becoming increasingly mainstream. In turn, more people are trying to launch their own online dating solutions.

You've got the old-timers — Match.com, OKCupid, eHarmony, Zoosk, JDate, and ChristianMingle. And then you've got the new and trendy apps, like Tinder and Hinge.

Each app or website claims to be the best solution for finding a soulmate, and each claims to be unique. But how did this niche suddenly take off? Why are there so many online dating sites and apps?

Boy meets girl

According to Dawoon Kang, cofounder of dating app Coffee Meets Bagel, the explosion of dating apps stems from a growing number of adult singles. That, by definition, creates a bigger population of potential users.

And then there's the fact that everything in our lives is shifting to digital. We shop, socialize, and do just about everything else online, so why wouldn't we want to make romantic connections online as well? Digitizing meeting people streamlines the process and makes it easier and less-time consuming to weed out potential matches that you already know aren't going to work out.

But while online dating may be much more convenient than conventional courtship, it can often be frustrating for users, which in turn leads to more willingness to try new platforms and apps — or try a bunch at a time. So if Tinder isn't doing it for someone, they can try out Coffee Meets Bagel, or Hinge, or any of the newer apps out there.

All of the dating apps out there are trying to some varying pain points of online dating. If an app can make the process at all exciting, fun, or engaging, it'll probably hook a bunch of singles.

"I'm 31 and most of my friends are still single," Kang told Business Insider. "The percentage of Americans remaining single is getting greater, which means more need for a product like this. And because it's so important and critical to our lives, that's why there's so much demand. The reason why I think there are more dating apps coming out is that the ones that are out there are so frustratingly underwhelming. A lot of people see a need to come up with more ideas."

In general, mobile apps are a pretty big improvement over websites when it comes to online dating.

"The mobile platform is simply a superior platform for internet dating," he told Business Insider. "Mobile daters will go on many times during the day but just for a few minutes, they're chatting and then they go back to work, and then jump back on.

"Internet dating has never really meshed with true user behavior," he said. "The true user behavior is when someone starts chatting someone else up, they'll be in a continuous conversation and reel them in for a date. the problem with online dating is the incentive structures are quite broken. Mobile gets us closer."

And so startups are rushing to build on this reality, trying to become the go-to place for finding a match in an organic and enjoyable manner.

One of the necessary hurdles for all of these apps is getting enough users to make it worth it for others to join. Who wants slim pickings when you can go to another platform with millions of users?

Most available apps don't actually disclose their user numbers, and try to avoid that question when attracting new downloads. They aim for organic growth, for users to invite their friends and their friends' friends and so on.

Some apps try to create an exclusive feel to generate interest. A new dating app called Wyldfire, for instance, is limiting its users to add hype and excitement.

Wyldfire, like Tinder, is also trying to attract college students, a prime audience for dating apps.

According to Wired, Tinder has 10 million active users, compared to the newer apps just launching that probably number more in the thousands. Coffee Meets Bagel told us they have "hundreds of thousands" of users, but most of the newer apps are just crossing a few thousand users.

But perhaps singles prefer the exclusivity as opposed to the massive numbers?

Lisa Hoehn, head of Profile Polish, says more users leads to a bigger pool to pick from, but that's not necessarily in everyone's best interest.

Most singles say they're looking for a match that shares certain interests with them, so a niche platform may be a great option. If, for instance, you're only looking to date a farmer, farmersonly.com is probably the best site for you. If you're looking for a vegetarian on the other hand, veggiedate.com is probably for you.

And while some of these newer apps like Wyldfire may not be as niche as those two sites, it may be a bit self-selecting in terms of the people that are drawn to the smaller apps, and you may just find the perfect match, despite a slightly smaller pool.

So... who's paying?

Just like with any app or startup, these dating platforms all need to figure out a way to stay afloat while still providing a valuable service to users. And while they may focus simply on acquiring new users at first, eventually the investments run out and a revenue model must trickle in.

In the old days, many of these dating platforms simply charged a monthly fee; a handful of sites maintain that model to this day. But for now, the newer dating apps are mainly steering away from those setups.

Some apps — like Coffee Meets Bagel — opt for a "freemium" model, charging for special features like revealing who's viewed your profile or chatting with an expired match. According to Kang, 3-8% of Coffee Meets Bagel users pay for these premium features.

Other apps are looking into creating added value by letting users narrow down the matches they are served by filters, such as religion and ethnicity.

Brooks thinks in-app spending is the way to go for these guys. Virtual currencies reel people in and can make the experience addicting, just like in popular games. Whether it be paying for the ability to open a chat, or the ability to see more matches, apps will have to find some way to create added value that is worth a user's financial investment.

And then there's always ads.

Wyldfire spices up the generic ad by using serving them up as rewards when users accomplish something like getting another user's contact information or getting a certain percentage of likes. They will receive an ad for something like $20 off their next Uber as a congratulations for hitting that milestone.

Justin McLeod, founder and CEO of dating app Hinge, foresees a consolidation similar to the way Facebook took over the social network space.

In its early days, Facebook competed with platforms like MySpace, Orkut, and Hi-5, but it eventually became the dominant sire.

"There certainly isn't a need for so many dating apps and platforms," he told Business Insider. "Networks are strengthened as more people join them, and it creates a virtuous cycle that eventually only allows two or three players at most to participate in the market.

"With the huge shifts in context that have occurred with mobile, social, and big data over the last 10 years, the existing online dating paradigm was ripe to be disrupted. In the future I think you'll see Tinder, Hinge and perhaps one or two others as the dominant participants in this space."

Another factor that may contribute to the consolidation is larger corporations acquiring the smaller startups when they run out of money. We saw this happen with IAC, which already owns Match.com and OKCupid, when it recently acquired How About We.

This is especially likely for the newer apps that tend to start from initial funding without a concrete revenue model. Once they run out of money, they're likely to look for buyouts from larger companies.

Profile Polish's Hoehn doesn't see the space getting any less crowded in the near future — mainly because the population of online daters is increasing and progressively diverse.

"I don't think the big online giants are going anywhere," Hoehn told Business Insider. "Especially because online dating is popular with the middle-aged population right now — and they don't seem to be as open to apps. But I think those under 30 are really going to start to embrace being able to date on the move. When you're on your phone there's less pressure, and it's easier to treat your online dating app like a game than something weighty and pressure-ridden.

"I think it's a space where there's room for everyone," she said. "So many people have their own idea for an online dating platform, and anyone who has the tech power is able to just up and build it. Which is awesome, but it definitely creates a crowded, confusing space for daters right now."

Brooks, on the other hand, really sees Match Group holding out as the powerhouse. Match Group is currently under IAC, but Brooks anticipates a future separation that would leave Match Group as the ultimate online dating umbrella.

While Match Group powers on, Brooks expects a lot of these newer dating apps to slowly drop out.

"Starting a dating app is rather like starting a restaurant," Brooks said. "It looks very easy to do. It's a very sexy business. People like to set people up on dates but it's a lot more difficult because of the critical mass problem.

"What I typically find happens is that I get entrepreneurs who say I've got this budget and I spent this building the app. I've got 10% left and now I want to grow it," he said. "Well it's the other way around. It does require cold hard cash to grow. Although there may be many startups, there will be few survivors. Very few have that unique way of driving eyeballs. Tinder did well, there will probably a hundred more Tinders, but there will be three or four that will be successful."